Strategic Hotels & Resorts, Inc. last week signed an agreement to purchase New York City’s Essex House Hotel from the Dubai Investment Group for a gross purchase price of approximately USD three million. The company has also signed a 50-year management agreement with Marriott International to rebrand the hotel as the JW Marriott Essex House New York.
The purchase price includes 509 hotel rooms,
nine condominium units and significant hotel-level cash reserves. Net of the acquired cash reserves, the transaction equates to a purchase price of approximately USD 5,000 per unit, based on 518 total units. The transaction, which is subject to the satisfaction of customary closing conditions, is expected to close on or before September 7, 2012. Laurence Geller, President and CEO, Strategic Hotels & Resorts, Inc. commented, “The Essex House is one of New York City’s most recognised high-end hotels, and I am pleased that we are able to reacquire this landmark asset and convert it to the first JW Marriott in Manhattan. The combination of the Essex House Central Park South location, Marriott’s outstanding distribution and world-class customer service, and our successful long-standing relationship with the Marriott brands, clearly positions the Essex House for success.” As part of the management agreement, Marriott will guarantee the net operating income of the hotel up to USD 21.5 million per year for a period of eight years, subject to a maximum funding by Marriott of USD 14 million in 2013 and USD 12 million in each year from 2014 to 2020. Total cumulative fundings by Marriott are capped at USD 40 million. Upon closing, Strategic Hotels plans to invest approximately USD 18.3 million in various property improvements, including renovations to various common areas, select systems upgrades as well as new signage and other branding efforts to distinguish the property under the JW Marriott flag.
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nine condominium units and significant hotel-level cash reserves. Net of the acquired cash reserves, the transaction equates to a purchase price of approximately USD 5,000 per unit, based on 518 total units. The transaction, which is subject to the satisfaction of customary closing conditions, is expected to close on or before September 7, 2012. Laurence Geller, President and CEO, Strategic Hotels & Resorts, Inc. commented, “The Essex House is one of New York City’s most recognised high-end hotels, and I am pleased that we are able to reacquire this landmark asset and convert it to the first JW Marriott in Manhattan. The combination of the Essex House Central Park South location, Marriott’s outstanding distribution and world-class customer service, and our successful long-standing relationship with the Marriott brands, clearly positions the Essex House for success.” As part of the management agreement, Marriott will guarantee the net operating income of the hotel up to USD 21.5 million per year for a period of eight years, subject to a maximum funding by Marriott of USD 14 million in 2013 and USD 12 million in each year from 2014 to 2020. Total cumulative fundings by Marriott are capped at USD 40 million. Upon closing, Strategic Hotels plans to invest approximately USD 18.3 million in various property improvements, including renovations to various common areas, select systems upgrades as well as new signage and other branding efforts to distinguish the property under the JW Marriott flag.
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